Summary of Illinois Director of Insurance’s Corrective Order
Triad Guaranty Insurance Corporation, In Rehabilitation ("Triad"), has received a Corrective Order ("Order") from our regulator, the Illinois Director of Insurance ("Illinois Director").
Continuing volatility in the housing and mortgage markets, as well as worsening conditions in the overall economy, make it very difficult to forecast Triad’s future financial position and claims.
There is more uncertainty today than when we entered run-off in July 2008. Because of this uncertainty, the Illinois Director has determined that it is in the best interests of Triad’s policyholders to require Triad to settle claims with a combination of cash and deferred payment obligations, and has issued an Order to that effect.
Triad’s claims-paying resources, represented by our invested assets, capital supporting our reinsurance contracts and expected future premiums are substantial. Despite these resources, the uncertainty in the future direction of the economy and the decline in our capital have increased the possibility that Triad may not be able to meet all future obligations under its policies.
In order to serve the best interests of all Triad policyholders, and treat all current and future claims equitably, the Order changes the way Triad will pay claims. Under the Order, effective June 1, 2009, or a later date established by the Illinois Director, all valid claims under Triad’s mortgage guaranty insurance policies will be paid 60% in cash and 40% by the creation of a deferred payment obligation ("DPO"). The DPO will be represented by a separate entry in Triad’s financial statements and will accrue a carrying charge based on the investment yield earned by Triad’s investment portfolio. When, and if, our financial position permits, the Illinois Director will allow Triad to increase the amount of cash we pay on each claim.
On the menu to the left we have provided additional details on the Order.
Additionally, we have set up a direct call in number if you wish to speak with a Triad associate about specific questions – (800) 233-3056.
On December 11, 2012, the Illinois Department of Insurance (the "Department") issued an Administrative Order recommending that Triad Guaranty Insurance Corporation, In Rehabilitation ("Triad") be placed in rehabilitation. Additionally, the Department is expected to file today a Complaint for Rehabilitation with the Circuit Court of Cook County, Illinois seeking an Order of Rehabilitation. The Board of Directors of Triad has consented to the Order of Rehabilitation and it is expected to be entered by the Court in the near future. Documents may be found at: http://insurance.illinois.gov/hearings/
As a result of the Order, Triad and the Department will work together to prepare a Rehabilitation Plan (the "Plan") that is expected to be filed with the Circuit Court of Cook County, Illinois in the first quarter of 2013. Upon filing, our policyholders will have the opportunity to review the Plan and share comments on the Plan with the court.
In run-off, we have worked to maximize the value of Triad’s insurance coverage to our policyholders in an efficient manner that meets the operational needs of our policyholders and servicers. Those objectives will not be changing. Until further notice, all of our processes and procedures will remain as they are currently. We will notify you of any anticipated changes once the Rehabilitation Plan is finalized.